Numerous times throughout Hamlet, characters use figurative language to describe something elusive or complex. The idiom "mind’s eye" shows up several times: they are not referring to an actual eye, but instead using this phrase to reference their visual imagination.
The first instance of this is in Act 1, Scene 1, when Horatio says (of the ghost): "A mote it is to trouble the mind’s eye." In this case, Horatio means to express that he thinks everyone should take the appearance of the ghost seriously and that it is worrisome; he thinks that, like something small that gets in and irritates an eye, the ghost's appearance will be the source of discomfort and trouble. The eye he refers to, however, is a non-physical one. Instead, he seems to imply, the appearance of the ghost will cause great trouble in the consciousness of the men present.
A second example of the phrase "mind’s eye" comes in the next scene, right before Horatio confesses to having seen the ghost the night before. After a conversation about why Horatio has returned to Elsinore, Hamlet says:
My father—methinks I see my father.
Horatio: Where, my Lord?
Hamlet: In my mind’s eye, Horatio.
The use of the idiom "mind’s eye" is slightly different in this case. Hamlet uses it to imply that he does not actually see his father before him, but is able to imagine what he looks like. He therefore can call his father to mind visually. The use of this phrase sets up what happens next: Horatio confesses that he did literally see Hamlet’s father the night before. The use of "mind’s eye" is significant in Hamlet because for so much of the play, the minds of the characters seem impenetrable. Their ability to formulate and describe what they are imagining is an important part of their dialogue and becomes even more so as madness and terror creep into their consciousness.